20100429 0929 Global Economic News.

Federal Reserve officials restated their intention to keep the benchmark policy rate near zero for an “extended period” and saw signs of life in the job market. “The labor market is beginning to improve,” the Federal Open Market Committee said in a statement, after last month saying it was “stabilizing.”

• Officials also said growth in household spending has “picked up recently.” “Economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period,” the Fed statement said. (Bloomberg)

President Barack Obama plans to announce his choice of Federal Reserve Bank of San Francisco President Janet Yellen tomorrow as vice chairman of the Fed Board of Governors, according to two people familiar with the decision. The president will also name Sarah Bloom Raskin, Maryland’s commissioner of financial regulation, and Peter Diamond, an economics professor at the Massachusetts Institute of Technology, for the two remaining open seats on the central bank’s seven-person board. (Bloomberg)

US mortgage applications fell last week as rising mortgage rates hurt refinancing, while a looming deadline for a homebuyers’ tax credit boosted purchases for a fifth time in six weeks. The Mortgage Bankers Association’s index decreased 2.9% in the week ended April 23. The refinance measure fell 8.8%, while the gauge of purchases climbed 7.4% to the highest level since October, the month before the tax credit was initially due to lapse. (Bloomberg)

US manufacturers will fill fewer than 30% of 2m lost factory jobs as the economy recovers over the next six years, according to an estimate from an industry trade group. Most of the hiring will come in 2011 and 2012, David Huether, chief economist for the National Association of Manufacturers (NAM) said.

• Huether’s estimate for a return of 540k manufacturing jobs by 2015 fell from his previous prediction of 800k. He said he pared the number this month based on his projections that consumers will use more imports than US-made goods. (Bloomberg)

The financial crisis and recession cost US households an average of about US$100k in lost wealth and income, according to a study by former Treasury Department economist Phillip Swagel. From September 2008 through the end of 2009, households’ stock holdings fell US$66k and real estate dropped US$30k, according to the study. Each household also lost an average US$5.8k from unemployment and lower earnings. (Bloomberg)

German Chancellor Angela Merkel and the International Monetary Fund pledged to step up efforts to overcome the Greek fiscal crisis as Standard & Poor’s downgraded Spain and investors sold bonds in Europe’s most indebted nations. “It’s completely clear that the negotiations between the Greek government, the European Commission and the IMF need to be sped up now,” Merkel said. She said the “stability of the euro zone” was at stake if a EUR45bn (US$59bn) loan package for Greece can’t be delivered fast. (Bloomberg)

New Zealand’s central bank said it could raise its benchmark interest rate from a record low as early as Jun 10 as improving global demand buoys exports and underpins an economic recovery. “We expect to begin removing policy stimulus over the coming months, provided the economy continues to evolve as projected,” Reserve Bank Governor Alan Bollard said. (Bloomberg)

The U.K. economy remains in a “fragile state” and inflation should stay under control this year, former Bank of England policy maker Timothy Besley said. “Until we’ve seen a run of data that support the idea that we’re on a road to recovery, we have to still mark down the economy as in somewhat a fragile state,” Besley said. (Bloomberg)

Australian house prices grew at a slower pace in 1Q10 as the central bank’s five rate increases since Sep 09 took effect, Australian Property Monitors said. House prices rose 3.1% in 1Q10, from 5.3% in the previous quarter. Unit prices added 0.2%, compared with 2.6% in the prior period. (Bloomberg)

The prospect of contagion sweeping through European sovereign debt markets intensified Wednesday after Spain's sovereign rating was downgraded by Standard & Poor's Corp. The move, coming a day after S&P cut Greek debt to junk status and pulled Portugal down two notches, came as Greek debt markets have all but frozen amid fears the country may default if it can't repay bondholders by May 19. Investors are looking past Greece's well-known woes to ponder the possibility of a larger European government debt crisis. (WSJ)

A senior official of Bank Indonesia said that the country's economy grew by 5.7% in 1Q, partly because of better risk perception. "Economic growth in the first quarter reached 5.7% with a controllable inflation rate," BI Deputy Governor Budi Rochadi was quoted by the Jakarta Post. Budi said the supporting factors were better economic conditions and better risk perception. (Bloomberg)

Singapore’s inflation gains may become “steep” in coming quarters as improvements in the city- state’s labor market boost wages and businesses pass on higher costs to consumers, the central bank said. The consumer price index may rise 4% by the fourth quarter, accelerating from March’s 1.6% gain, the Monetary Authority of Singapore, or MAS, said. Growth drivers are likely to be “intact” and the level of economic activity will probably be “sustained at a high level,” according to the report. (Bloomberg)